Incorporated in 2000, RailTel Corporation of India is an information and communications technology infrastructure provider and one of the largest neutral telecom infrastructure providers in the country. RailTel Corporation kicked off its Rs 8,200 million initial public offer (IPO) on Tuesday.
The issue was opened for subscription on February 16, with a price band of Rs 93-94 per share, with a face value of Rs 10. Minimum application size for the issue has to be 155 equity shares, translating to a minimum application size of Rs 14,570. Overall, 87 million equity shares are on offer through the IPO.
RailTel has raised Rs 2,439.9 million from 14 Anchor Investors, allocating 25.9 million equity shares.
RailTel's issue is purely an offer for sale (OFS) with no fresh issue. Of this, 50% is reserved for Qualified Institutional Buyers (QIB), while 15% is for Non-Institutional Investors (NII) and the remaining 35% is for retail investors.
Prashanth Tapse, AVP-Head Research, Mehta Equities while commenting on RailTel IPO said, "We believe RailTel IPO gives investors a unique opportunity to invest in Mini Ratna (Cat-I) Central PSE company which has the monopolistic business opportunity and a key partner to the Indian Railways in digital transformation.
We are also optimistic about Railtel as it has partnered Bharat Net project to create optical fiber cable-based broadband infrastructure in laying optical fiber cable across 36,000 gram panchayats in India. With optic fiber network covering over 60K+ route kms and covers 6K railway stations across towns and cities in India, RailTel offers a diverse range of services across segments like Telecom Network Services, Internet Service and support Telecom Infrastructure Services to Indian Railways.
On valuations parse at upper price band (Rs 94/-), the issue is asking for market cap Rs 30,170 million with PE (annualized FY21) 33x and P/BV stands at 2x which seems to be fairly priced. Hence, looking at the faster digital transformation of Indian Railways and future growth prospects to generate additional revenue by offer Telecom Infrastructure Services, we recommend investors to 'Subscribe For Listing Gain'."
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